US indices have dropped off a cliff this morning after the US Consumer Price Index came in higher than expected (8.2% vs street 8.1%), which keeps pressure on the Fed to continue raising interest rates. Prior to the announcement, US Index futures were trading up 0.8%-1.0%, but they have since fallen though the floor and are trading down 1.5%-2.5% with the NASDAQ leading the way downward.
The US treasury note yield has climbed back up to 4.00%, sparking a rally in the US Dollar which is up 0.6% against the Euro, 0.9% against the Canadian Dollar, and 0.8% against Gold. The British Pound is the only currency even stronger than the US Dollar, with a 0.7% gain amid press reports that the UK government may walk back more of the unpopular tax cuts it had announced recently.
Early earnings reports remain upbeat. In a sign this morning that guidance could potentially be more important than earnings in some cases this earnings season, Delta Air Lines is up 1.8% in premarket action today despite missing expectations on EPS ($1.51 vs street $1.53). Investors responded favorably to EPS guidance of $1.00-$1.25 for Q4 and a forecast for traffic to exceed 2019 levels by 5.0%-9.0%. Drug store chain Walgreens also beat the street ($0.80 vs street $0.77). Earnings season really kicks in tomorrow with results due from Citigroup, JPMorgan Chase, Wells Fargo, UnitedHealth and several US regional banks.
